Britain is in the grip of an entrepreneurial revolution, with 80 new startups launching every hour and the number of sole traders reaching a record high of 4.6 million this year.
Technology is playing an increasingly important role in this culture of entrepreneurship, as digital tools help small business owners overcome obstacles and seize new business opportunities.
But what exactly are these technologies that have helped tear down the barriers to entry for Britain’s millions of small business owners? Let’s take a look.
Ecommerce is not exactly new – it’s been around for more than 20 years, with Amazon.com selling its first books to US consumers in 1995 – but it’s only recently that it has become an almost universal option for entrepreneurs in the UK, even those that lack retail experience, the support of a team of technologists or a sizeable development budget.
Before the advent of the internet small business retailers usually had to find a premises, fit it out, order enough stock to fill the shop (with stock in reserve too, of course) and generate footfall through advertising, branding, sales events, discount coupons and direct mail marketing.
As such, the old retail model required small business owners to raise enough startup capital to rent or buy a premises, buy enough stock to fill the shelves, and have the marketing savvy (and marketing budget) to get customers through the door before the business ran out of cash.
Ecommerce has changed that dynamic rather dramatically, democratising the world of retail in a very big way. Now small business owners can set up a shop on Amazon, Notonhighstreet, Made.com, Ebay or Etsy in just a few clicks, or launch their own branded ecommerce shop using a service like Shopify or a Wordpress plugin like WooCommerce…and they can do so for very little cost.
Stock can be stored in a small, compact, inexpensive storage facility (even in a spare bedroom), since it no longer needs to be displayed in a physical retail outlet on an expensive high street or shopping centre. And in some cases, such as when the ecommerce business employees a dropshipping model, the stock can actually be ordered immediately after a customer has placed (and paid for) an order, and shipped directly to the customer rather than being warehoused by the retailer.
Beyond the actual sales process, an ecommerce retailer’s products can be marketed for free (or close to free) using social media platforms, email marketing campaigns, Pay Per Click (PPC) advertising and content marketing.
Customer data and market intelligence have always played an important role in the success of a business. Whether it’s understanding sales trends in order to improve inventory management, or analysing the effectiveness of advertising campaigns in order to know where to allocate future marketing spend, data makes the (business) world go around.
In the past business owners often had to rely on market research in order to understand their customers, their competitors, their marketplace and its business cycle. Not anymore.
Web analytics, which combines powerful computer processing power with advanced ‘big data’ analytics techniques and elements of machine learning, now offers extraordinary data mining, customer intelligence and visitor analysis tools to even the smallest businesses.
Thanks to tools like Mixpanel, Google Analytics and Kissmetrics small business owners can now understand their website users in real time, and can judge the effectiveness and relevance of their own ecommerce or blog content, as well as the effectiveness of their online advertising efforts.
Analytics tools such as Similarweb and Spyfu can also help entrepreneurs perform competitor research at very little cost, by analysing a competitor’s website traffic data, their search engine rankings, their content marketing efforts and their backlinking strategy.
Finally, tools like Google Trends, Social Mention Trends or Trendsmap.com can enable small business owners to go ‘coolhunting’ at little to no cost, helping them understand changes in consumer demand, identify future trends and capitalise on an untapped market for particular products or services.
While the ubiquity of free or close to free technologies for startups makes bootstrapping a much more feasible possibility today, many small businesses still need growth capital when they’re ready to make the transition from startup to scale up. In the past this funding could prove quite difficult to come by, with venture capital and private equity often reserved for only the most defensible businesses (i.e. those with valuable patents, or with significant market share and brand recognition in a sector that had large barriers to entry).
While venture capital is still harder to come by than many startup founders assume, growth capital may be more readily available for small businesses with strong brands, even if they lack patents or other intellectual property. The reason for that is the emergence of crowdfunding.
Alternative finance has been around for almost as long as traditional financing, but crowdfunding is a relatively new form financing model that has grown exponentially in recent years.
Whether its debt-based, reward-based or equity-based crowdfunding, by leveraging new crowdfunding platforms to harness the collective support of “the crowd” startups can now raise very significant sums of funding in very short periods of time.
Many financial services experts have pointed out that we are fast approaching the end of cash, which could spell calamity for the small businesses that have traditionally been unable to install wired payment processing terminals (either because of the costs involved, or because of the mobile nature of their businesses).
Fortunately the onward march of technology, which precipitated this potential calamity on the one hand, is also serving as the saviour for popup shops, market traders, music festivals, ice cream vans and food trucks on the other. Mobile Point-of-Sale solutions, or mPOS, comprise a suit of technologies that have been specifically designed to help smaller retailers accept credit and debit card payments, without imposing prohibitive fees or necessitating a wired payment processing terminal.
As Britain has grown to become the fintech capital of Europe a growing number of mPOS apps and devices have sprung up to serve the UK’s small businesses, including SumUp, iZettle, Payleven, AirPOS, Swish and Square. The processing fees they levy can vary from app to app (for example, 2.75% for iZettle and Square, 1.5% for Swish), but differences aside they are all designed to give market traders, popup shop owners, food trucks and other small retailers the ability to accept card payments anywhere and everywhere.